Delinquency Score

A delinquency score (D&B's Delinquency Predictor and the delinquency-oriented use of Experian's Intelliscore are typical examples) predicts severe slowness rather than outright failure: the probability that a business will have obligations 90 or more days past due, be placed for collection, or charge off within the next twelve months. Its inputs are dominated by payment behavior — current and historical slowness, trends in days beyond terms, the mix of prompt and slow trade lines — supplemented by public records and firmographics.

For a trade creditor, delinquency risk is the everyday risk. Most credit-department pain is not bankruptcy; it is the customer who ties up working capital by paying in 75 days, consumes collector time, and forces cash-flow forecasting errors. Delinquency scores let you price that in operationally: shorter terms or smaller limits for high-delinquency-risk accounts, prepayment or credit-card-only for the worst band, and collector attention weighted toward accounts whose scores are deteriorating rather than spreading effort evenly.

Watch trend and divergence. A delinquency score that worsens while your own account experience is still clean is a preview — the customer has started stretching other suppliers first, and your turn is coming. That divergence window, often one to three months, is exactly when limit reductions and term changes are cheap to make. After the slowness reaches your ledger, the same actions are harder and the exposure is larger.